Originally created 08/31/02

Stocks fall Friday in light trading ahead of holiday



NEW YORK -- Wall Street bumped through a quiet session Friday, with blue chips rising on some upbeat economic news and then dropping back as investors played it safe before the Labor Day weekend. Tech stocks lagged throughout the day.

Analysts shrugged off Friday's trading, which came amid very light volume ahead of the holiday. The session capped a lackluster week that was notable mostly for profit-taking from five weeks of advances; it also ended a month in which the stock market started showing some meaningful signs of health after its prolonged slump.

"We are really going to start over after Labor Day and sink our teeth into good trading. Will it be the result of economic news, we don't know," said Stephen Carl, principal and head of equity trading at The Williams Capital Group. "We have to have strong economic numbers and strong earnings numbers."

The Dow Jones industrial average closed down 7.49, or 0.1 percent, at 8,663.50, its fourth straight loss. The Dow gave up an earlier gain of 112 and ended a five-week winning stretch.

Broader indexes also ended Friday lower. The Nasdaq composite index fell 20.92, or 1.6 percent, to 1,314.85. The Standard & Poor's 500 index declined 1.73, or 0.2 percent, to 916.07.

The three major market gauges finished the week lower, ending a five-week winning streak for the Dow and S&P and a three-week run for the Nasdaq. For the week, the Dow lost 2.4 percent, the Nasdaq declined 4.8 percent, and the S&P fell 2.6 percent.

Although the market ended August by declining, stocks nonetheless showed some solid signs of life during the month and had many market watchers starting to believe that Wall Street had at last reached a bottom after months of selling.

The Dow ended August down 8.4 percent, while the Nasdaq was off 9.8 percent. But the broadest of the three indexes, the S&P 500, rose 4.4 percent.

It was hard to glean much about investors' state of mind from Friday's trading. While they are feeling more confident about stocks, they were expected to take some profits, especially ahead of the three-day weekend.

"It is encouraging that the pullbacks have been relatively restrained. So far, everything has been a normal correction in an uptrend," said Richard A. Dickson, technical analyst at Hilliard Lyons in Louisville, Ky.

Among the economic reports Friday, analysts said investors were heartened by news that manufacturing activity increased in the Midwest as the Purchasing Management Association of Chicago index of area business activity rose to 54.9 in August. The index is considered a harbinger of the Institute for Supply Management's national survey on manufacturing, due to be released Tuesday.

Overall, the data on the economy was mixed.

The Commerce Department reported that while consumers increased their spending by 1 percent in July, their incomes remained flat due to a stagnant job market. Wages and salaries themselves declined by 0.2 percent. The spending picture surpassed analysts' expectations, but the income data fell short.

The University of Michigan's consumer sentiment index slipped to 87.6 in its August survey, a weaker reading than analysts were expecting.

Technology suffered the brunt of Friday's selling, tumbling on negative developments among wireless, chip and networking companies.

BellSouth fell 93 cents to $23.32 after cutting its 2002 earnings outlook, which now falls short of analysts' expectations. BellSouth blamed ongoing weakness in wireless revenues and a restructuring charge for Cingular Wireless, its venture with SBC Communications, which also fell, down $1.06 at $24.74. Additionally, Fitch cut its credit ratings on BellSouth and SBC, a Dow industrial, to "negative" from "stable."

And Lam Research Systems fell 32 cents to $11.63 and KLA-Tencor declined 71 cents to $32.91 after Merrill Lynch downgraded the chip equipment makers.

Sun Microsystems fell 14 cents to $3.69, the day after cutting its quarterly revenue outlook.

Despite the downturn in the indexes, advancing issues managed to outnumber decliners 5 to 4 on the New York Stock Exchange. Consolidated volume was extremely light at 1.16 billion shares, down from Thursday's already slim 1.52 billion.

But decliners led advancers more than 8 to 7 on the Nasdaq.

The Russell 2000 index, the barometer of smaller company stocks, fell 3.44, or 0.9 percent, to 390.96.

Overseas, Japan's Nikkei stock average finished Friday essentially unchanged, off 0.01 percent. In Europe, France's CAC-40 rose 1 percent, Britain's FTSE 100 gained 0.4 percent, and Germany's DAX index advanced 1.4 percent.

On the Net:

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com